BRIT Review

After Manchester: What next for the Conservative Party? by Dr Ed Gouge

A casual observer from Moldova of the two main party conferences might have concluded that Labour had just won the general election and the Conservatives had just lost it, such was the enthusiasm at Brighton and the sobriety, at least in the main auditorium, at Manchester.

The Conservatives had decided before the Conference that they would not be triumphalist but, instead, given the Conference slogan of ‘Security, Stability, Opportunity’, show that they were getting on with the job of economic recovery and social reform, but perhaps there was more to it than that.

An air of confidence

There was certainly an air of confidence after the unexpected election victory, compounded by the expectation that the three parties which compete for votes with the Conservatives are in no position to do so at present. UKIP failed to make a breakthrough in seats, their one MP is semi-detached from the party, and their effort over the next two years will be directed to the EU referendum rather than challenging Conservative policies.

Their vote in local by-elections since May is falling, often to half of what it was during 2013 and 2014. Since Conservative MPs can campaign against staying in the EU there will be no defections to UKIP before the Referendum. Labour’s immediate appeal is to Green voters, working class UKIP voters and young people who did not vote last time, rather than to Conservative voters. The Liberal Democrats are doing quite well in local by-elections but have moved away from the centre-right position that they held under Nick Clegg. It was the Conservative success in winning back seats such as Twickenham and Lewes, which had been safe for them before the 1990s, which gave them their majority and the Liberal Democrats are a long way from winning these back.

The atmosphere at Conference may have resulted from delegates trying to work out what sort of party they are. In economic policy the Conservatives have shifted further right than even Margaret Thatcher managed, with increased deregulation and privatisation of public services. Cameron’s EU renegotiation and the Transatlantic Trade and Investment Partnership (TTIP), if it ever gets through the US Congress and the European Parliament, may lead to further deregulation. Some Conservative MPs want quicker deficit reduction, while Osborne has been ready to slow it down if the economy looks fragile, but his spending plans will still reduce public spending as a proportion of GDP to the levels that pertained before 1939.

Taking the middle ground

The main Conference speeches, in contrast, looked to occupy the middle ground of politics which the leadership perceives to have been vacated by Labour. One Nation rhetoric has been used successfully by the Conservatives over the decades to identify the party with the majority and Labour with sectional interests.

Osborne followed his adoption of a Living Wage in the Budget with a Government Infrastructure Commission, headed by a Labour peer, to oversee the £300bn of capital spending already announced. Cameron, Gove and Duncan Smith all put dealing with poverty at the top of the agenda. Michael Gove talked both about the need to look at the reasons why people ended up in prisons and raised the issue of whether people became rich in a responsible or irresponsible way. Iain Duncan Smith talked about the causes of poverty while linking them to the Conservative theme of helping strivers.

Cameron was able to return to some of the themes such as social equality that he adopted when he was looking to modernise the party before the 2010 election and create the sort of Conservative Party that he has always wanted. The right in the party has always been suspicious of Cameron but they may now be in a weaker position. Many of the traditionalist and older Tories have left the party or joined UKIP and there were certainly plenty of young faces in the audience at Manchester. With the change in party membership, many of the 2010 intake of Conservative MPs were chosen by their constituency parties because of their career experience than their hardline Euroscepticism and are more pragmatic than many in the previous intakes.

Policy announcements may mean long-term problems

There is no need for a Government to announce new policies at Conference but it does get them more publicity. The ones that were announced all have long term problems. Theresa May developed a hard line on immigration. This may bring UKIP voters back, though many of them don’t believe anyone except Nigel Farage, but it may not actually help her Leadership bid given the changes in the party explained above. The concrete proposals were to give those granted asylum temporary rather than permanent status and deny entry to non EU citizens married to EU citizens but the international reaction to this will be important.

George Osborne’s decision to allow local authorities to keep all the money that they raise in business rates in return for, as yet unspecified, extra responsibilities fits in well with his other proposals to devolve health, transport and economic development powers to the big cities. A problem though is that the City of London, at one extreme, only has to keep 0.2% of its business rates to maintain current spending, while other local authorities with limited commercial property would have to raise their rate by 30% or more, in any case illegal, to do the same. The Government has said that there will be still be equalisation between authorities but not how it will work when the money has been devolved. More radical ideas such as taking most small businesses out of the need to pay rates or moving to a turnover tax now do not look likely to be considered.

The Conservative message of Opportunity depends on reversing the decline in home ownership. However, incomes and house prices have become so out of line with each other that achieving this is now very difficult. Cameron’s announcement of 50,000 starter homes a year is unlikely to be enough to change house prices and, in any case, a fall would have political repercussions. The new houses will most likely be one and two bedrooms at 20% below market price for couples both earning with a reasonable income. This may well cement Conservative support in the medium sized Midlands towns, for example, where they won over Labour and will also boost the economy but the overall housing problem will remain a political issue. The most difficult thing will be to decide where they are to be built. In the Conservative shires, people will accept a few extra houses for local needs but are opposed to large scale building. If the Government overrules local councils or removes planning control, as they are threatening, then Conservative MPs will be under a lot of pressure locally.

Relative silence on the EU referendum

Just as Labour kept away from any debate on Trident in the main Conference, the Conservatives did not discuss the EU referendum, though the fringe meetings on the topic were packed.

The issue is even more divisive for the Conservatives than the nuclear issue is for Labour and the divisions are even more insoluble. Cameron has been careful not to publish a detailed negotiating position yet but has explained the main elements of what this would be in a number of interviews. An opt out from ever closer union, not allowing the Eurozone countries to overrule Britain in areas affecting the single market and the City, and less regulation internally and in trade deals, are likely to be accepted by both other EU countries and the Anti-EU wing of the party.

Beyond this the negotiations get very tricky. Cameron wants to restrict benefits for EU migrants but this will require treaty change or the European Court will rule against it and Eastern European member states are unlikely to agree unless they get something pretty substantial in return. Anti-European Conservatives want to restrict the free movement of people within the EU but this would be a fundamental change to EU treaties. Cameron is asking for clearer powers for national Parliaments to collectively veto EU legislation but what anti-EU Conservatives want is a return of parliamentary sovereignty to Westminster, which is very different. They want the EU to become just a free trade area with Britain being able to decide its financial contribution, what regulation it wants and its own trade agreements with a separate place again in international trade organisations. The problem here is that the original Common Market wasn’t just a free trade area even in 1957. When the original six countries signed the Treaty of Rome they basically agreed to pool sovereignty in order to carry out economic integration and this is fundamental to the whole EU project.

The Conservative factions have been very restrained, perhaps sensing that the renegotiation is not going to make much difference and so all efforts will go into the referendum campaign anyway. The problem will be pulling the party back together again after the result. Interestingly, Boris Johnson, though buying into the social reform agenda as you would expect from a Mayor of London, has not taken a firm stance on Europe. He has a tendency to wait until the last minute before taking an important decision and, if he senses that Cameron may lose the referendum and then resign, see this as the opportunity to become the Leader who can bring the party back together.

A successful conference but challenges ahead

The Conservative Conference was successful and Cameron’s speech very important in ensuring this. It may be that the Conservatives are heading along the path to the ‘sunny uplands’ of political dominance for the next ten years or more but the journey will have to negotiate a few versions of what Bunyan, in The Pilgrim’s Progress, called the slough of despond (poor old Slough, already suffering from the pen of John Betjeman).

The NHS deficit is increasing, so watch for George Osborne, like all Chancellors in the past, finding an extra few £billion to plug the gap. The NHS problem interlocks with the crisis in social care provision though and the new Living Wage may drive many businesses providing social care out of the market. The full realisation of the Tax Credit cuts will hit people after Christmas and MPs surgeries and email boxes will be full of complaints. The impact of local government cuts will intensify. Most serious of all is the world economy with indebtedness in emerging economies and a slowdown in Chinese growth which are why George Osborne was so cautious in his Conference speech.

Finally, the EU referendum is waiting down the road with the danger of a NO vote and the knock on effect that this will have on a renewed demand for Scottish independence. If Cameron gets through all these successfully by 2018 he will feel that he can hand over to a new Leader who can hope to be there for some time.

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